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“Distressed Investing” Series - June, 2007

“Inventory Mismatch”:  Are your customers stomping on you for sending the wrong inventory or poor quality inventory at the wrong time?

Inventory is an area where many under performing manufacturing companies have room for improvement.  Cumberland Capital has experience in dealing with this, and would like to help your company make improvements.   Signs of problems include:

• Inventory turnover slowing
• Mismatch in inventory on-hand vs. inventory requested by customers; often there is too much inventory of slow-moving or outdated products, and not enough of high turnover products; until we do an inventory analysis by product, this mismatch might not be obvious
• Inventory rejects increasing; these may or may not be segregated physically in the plant; may or may not be re-worked
• Inventory rejects continue to accumulate rather than being shipped out for “fire sale”
• Too much money is tied up in slow-moving inventory, causing cash flow issues
• Difficulty obtaining critical raw material or parts for production and completion of an order, resulting in production held up on high demand products
• Business managed for manufacturing efficiencies rather than to meet customer demand
• Insufficient new products created and/or lack of product innovation
• Pricing outdated: no price increases to customers in years, notwithstanding raw material price increases from suppliers
• Standard cost outdated as production is cut back, resulting in under-absorbed overhead, and bad data on which selling price decisions are made
• Poor internal controls on price discounts to customers, resulting in many different prices, lower margins and confusion by customers and salesmen
• Poor forecasting of demand by customers
• Poor shipping controls resulting in partial shipments or shipments of the wrong items.

If any of these sound familiar, and you’re uncertain how to resolve these issues, call Deby Glidden to help make change and improvement happen.  The result should be substantial cash generated from better inventory management.   Cumberland Capital does independent consulting and is also affiliated with Private Equity Groups which invest in distressed companies, including “Messy Ownership” situations (April, 2007 e-newsletter), where companies have revenue from $10 million to $100 million, located preferably in the eastern half of the US.

Deby Glidden
President
Cumberland Capital Company
10 Piedmont Center, Suite 525
Atlanta, GA  30305
Tel. 404-995-6220; Fax 404-995-6221
www.cumberlandcapital.com
glidden@cumberlandcapital.com